A mining pool forms when group of miners work together to mine a block.

The pool manager receives the coinbase transaction if the block is successfully mined, which is then responsible for distributing the reward to the group of miners who invested resources to mine the block. This is profitable as compared to solo mining, where only one sole miner is trying to solve the hash puzzle because, in mining pools, the reward is paid to each member of the pool regardless of whether they (more specifically, their individual node) solved the puzzle or not.

There are various models that a mining pool manager can use to pay to the miners, such as the Pay Per Share (PPS) model and the proportional model. In the PPS model, the mining pool manager pays a flat fee to all miners who participated in the mining exercise, whereas in the proportional model, the share is calculated based on the amount of computing resources spent to solve the hash puzzle

A comparison of hashing power for all major mining pools is shown in the following diagram.

Mining centralization can occur if a pool manages to control more than 51% of the network by generating more than 51% hash rate of the Bitcoin network. As discussed earlier in the introduction section, a 51% attack can result in successful double-spending attacks, and it can impact consensus and in fact impose another version of transaction history on the Bitcoin network.